As Ascendas REIT (AREIT) has delivered better occupancy of 91.9% in 3QFY2020, analysts are positive on its prospects ahead.
CGS-CIMB Research has upgraded AREIT to an “add” rating from “hold” and raised its target price to $3.20 from $3.12, previously.
The brokerage has also increased its FY2021-2022 distribution per unit (DPU) forecasts to factor in interest cost savings from the perpetual securities issued in September.
The higher forecasts also account for the new contributions from AREIT’s two Australian properties under development, scheduled to be completed over the next two years.
“AREIT’s share price had retraced by 13% over the past three months and offers attractive FY21 yield of 5.1%,” CGS-CIMB analysts Lock Mun Yee and Eing Kar Mei write in an Oct 26 report.
Meanwhile, Maybank Kim Eng has maintained its “buy” call for AREIT with an unchanged target price of $4.00.
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It has also kept its earnings forecasts as it believes the drivers of AREIT’s bottom line are intact.
“Fundamentals remain strong, supported by scale, concentrated Singapore business parks portfolio, and DPU upside from further overseas diversification,” Maybank KE analyst Chua Su Tye writes in a note dated Oct 27.
OCBC Investment Research has also retained its “buy” recommendation for AREIT with an unchanged fair value of $3.92.
The brokerage deems AREIT’s attractive distribution yield of 5.1% for FY20 and 5.4% for FY21 as a “good entry point”.
“We also see upside potential from inorganic growth opportunities ahead given AREIT’s healthy balance sheet and geographical reach,” the OCBC research team writes in an Oct 27 report.
As at 11.56 am, AREIT was up 4 cents or 1.3% at $3.07 with 5.6 million units changed hands.
